DOWNSTREAM OIL THEFT

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Downstream Oil Theft: Global Modalities, Trends, and Remedies 170 barrels—onto purpose-built canoes. That illegal fuel is then sold to filling stations in the Takoradi area, making it disappear into the legitimate market. Given the complete evasion of taxes involved, the business is lucrative, and it seems to have gained the support of some law enforcement personnel. Local police allegedly provide secure delivery of the illicit fuel to the filling stations in exchange for a share of the profit. 166 Regional Fallout Though it is two states away, if Nigeria fails as a state and the Niger Delta Avengers continue to attack oil infrastructure, there could be a spillover effect on Ghana. The concern for Ghana, besides the regional instability and the catastrophic economic and security fallout from Nigeria’s collapse, is the potential threat to oil infrastructure along the coast. The militants have already begun attacking farther and farther from their Bayelsa and Delta State strongholds. While there have been no attacks as of yet in Benin, Togo, or Ghana, the WAGP remains a vulnerable target, and these groups could potentially shut down the gas supply to Ghana. Such an eventuality would, in turn, force Ghana to scramble to meet its energy needs, potentially precipitating an uptick in criminal activity and the illicit trade in hydrocarbons. Fuel Siphoning (Petty Crime) Fuel siphoning is a rather frequent, although predominantly low-level, problem in Ghana. Most siphoning, even when systematic, constitutes small-scale theft of fuel from generators and storage tanks at industrial and commercial facilities. Telecommunications and utilities companies are frequent victims as their extensive infrastructure is rarely guarded. 167 Even when they are guarded by private security, however, the guards are occasionally involved, as was the case in a March 2016 incident at a Vodafone facility. 168 When tanker trucks are involved in serious traffic accidents, opportunism is at a premium and even police officers have been known to be involved in such ad hoc windfalls of looted fuel. 169 166 “Illegal Oil Bunkering in Takoradi Port,” Ghana Oil Watch, October 12, 2011, http://ghanaoilwatch.org/index.php/ghanaoil-and-gas-news/646-illegal-oil-bunkering-in-takoradi-port. 167 “Ghana - Fuel Siphoning Syndicate Busted At Ejisu,” All Africa, February 20, 2014, http://allafrica.com/stories/201402201502. html. 168 “Gang of Three Go in for Fuel Theft,” Ghana News Agency, March 23, 2016, http://www.ghananewsagency.org/social/gangof-three-go-in-for-fuel-theft-101898. 169 “Police Command Takes Over Investigations on Siphoning of Petrol from Tanker by Cops,” Graphic Online, April 28, 2013, http://www.graphic.com.gh/news/general-news/ police-command-takes-over-investigations-on-siphoningof-petrol-from-tanker-by-cops.html; “Ghana, Police Caught Scooping Fuel,” All Africa, April 24, 2013, http://allafrica.com/ At a more systematic level, the state-owned Bulk Oil Storage and Transportation Company (BOST), with total storage capacity of 425,000 barrels around the country, has been a regular target for illicit operations. 170 In May 2011, for example, four employees at one depot tried to steal two tanker trucks carrying over 27,000 liters of industrial oils, but were arrested in the process. 171 In 2013, the head of security for the depot, together with several colleagues, all working for the private security firm Jidem, were arrested in the process of siphoning 4,500 liters of fuel into nineteen barrels. While they intended to steal twentyfour barrels, they were thwarted by police after a vigilante refused a bribe and reported their activity. The siphoning scheme was said to be the work of a syndicate involving other BOST employees, allegedly including the regional BOST manager. 172 While nowhere near as significant an issue as in Nigeria, tapping and siphoning off of pipelines is also a problem in Ghana. According to BOST, between 2011 and 2013, nearly eight hundred thousand liters of fuel were tapped from the sixty-one kilometer (km) pipeline that runs north from Tema to Akosombo. The illegal taps showed a sophistication that suggested well-organized and technically skilled criminals. At first, state security forces were assigned to conduct constant patrols along the pipeline, but more recently plans have been set in motion to replace the existing pipes and fit the new pipeline with a Supervisory Control and Data Acquisition system, involving closedcircuit cameras and other means of theft detection, obviating the need for military patrols. 173 In a more detailed exposition of the new approach to pipeline security, in June 2015, BOST Managing Director Kingsley Awuah Darko indicated that extensive security measures, including motion sensors, alarms, and both fiber optic and rapid response surveillance would accompany the laying of the new Akosombo- Accra Plains pipeline. Existing pipelines would also be retrofitted with similar security measures. 174 stories/201304250902.html. 170 “Petroleum Tanker Drivers Worried at Oil Siphoning at Kumasi BOST,” My Joy Online, January 24, 2014, http://www. myjoyonline.com/business/2014/january-24th/petroleumtanker-drivers-worried-at-oil-siphoning-at-kumasi-bost.php; “Key Responsibilities,” Bulk Oil Storage and Transportation Company, 2016, http://www.bost.com.gh/key-responsibilities. 171 “BOST Thieving Staffs Busted,” Ghana Web, May 15, 2011, http:// mail.ghanaweb.com/GhanaHomePage/NewsArchive/artikel. php?ID=208554. 172 “Kumasi - Oil Stealing Syndicate at BOST Busted,” Ghana Web, October 27, 2013, http://www.ghanaweb.com/ GhanaHomePage/economy/artikel.php?ID=290028. 173 “Akwamufie Nkosuohene Warns Saboteurs,” The Chronicle, December 18, 2014, http://thechronicle.com.gh/akwamufienkosuohene-warns-saboteurs/. 174 “Tight Security for New BOST Pipelines - MD,” Ghana News ATLANTIC COUNCIL 29
Downstream Oil Theft: Global Modalities, Trends, and Remedies Fuel Smuggling While the dynamics seem to be changing, fuel smuggling in Ghana has long been a profitable form of illicit activity. Between 2005 and 2015, Ghana maintained a fuel subsidy of at least 50 percent, driving the price of fuel in Ghana well below that of its neighbors and creating the conditions for profitable smuggling. Furthermore, currency discrepancies have also played a role in ensuring the value of smuggling. While Ghana uses the Ghanaian cedi, all of its neighbors use the West African CFA franc. Since the West African CFA is the currency of an eight-country monetary union, the value difference between the currencies of Ghana and all three of its neighbors remains consistent in every direction, though the price of fuel may still vary somewhat. Border areas such as Sampa in the Dormaa West District (near the Ivorian border) and Bolotanga, Sankase, Widana, and the Bawku District in the Upper East region (near the Togolese and Burkinabe borders) have unusually high numbers of fuel stations considering the relative sizes of their populations, suggesting that there is a fairly high level of interest in facilitating smuggling operations. 175 For years, fuel has been taken from those stations and illicitly sold for substantial profit across the border in neighboring states. In the Bawku District, for example, smuggling is alleged to be the largest source of income. Similarly, Bolatanga, an area comprised of fewer than 100,000 people, receives shipments of more fuel than the capital Accra, a city of 2.3 million. The main drivers of systematic smuggling operations in Ghana are licensed distribution companies, which have long been facilitating the illicit movement of refined products. These fuel stations provide lower cost products to affiliated smugglers to sell across the border for profit. In January 2016, Interior Minister Mark Woyongo called attention to this dynamic, noting that a number of these stations are operating without the requisite licenses or authorization from either the National Petroleum Agency or the Environmental Protection Agency. 176 Energy Ministry officials also note the extensive connections between fuel distribution centers and the political class, suggesting that obtaining a license requires political ties. Local residents have even made allegations that many of the Agency, June 6, 2015, http://ghananewsagency.org/economics/ tight-security-for-new-bost-pipelines-md-90201. 175 “Fuel Smuggling Draining Ghana,” Ghana Web, January 13, 2016, http://www.ghanaweb.com/GhanaHomePage/ NewsArchive/Fuel-smuggling-draining-Ghana-407423. 176 “Interior Ministry Worried over the Influx of Fuel Stations Close to the Borders,” GBC Ghana, January 12, 2016, http://www. gbcghana.com/comments-1.8554239. border fuel stations are owned by syndicates headed by powerful politicians or their relatives and business connections. 177 Given that, in 2013, the chairman of the parliamentary Public Accounts Committee found that the high number of licenses being issued for fuel stations near the border violated regulations, and in response, the NPA shifted the blame to other agencies, the charge has considerable merit. 178 One of those other agencies is the Chamber of Oil Marketing Companies (OMC). The OMC retains the strategic responsibility for locating fuel stations. Despite a few attempts, no one has successfully challenged the OMC on this issue. While the figure is difficult to verify, officials have stated that fuel smuggling costs the government roughly 50 million Ghanaian cedis ($12.6 million) in revenue each year. In August 2016, a liter of petrol cost the equivalent of $0.89 in Ghana and $1.03 in Burkina Faso—a significantly smaller price gap than during the decade of subsidies. In black market terms, this means smaller margins, so smugglers are beginning to work to operate at scale to generate reasonable profits. This development may partly explain reports of smuggling on the border with Burkina Faso increasingly taking the form of tanker trucks rather than smaller modes of transport. Investigative reporters have indicated that while as many as twenty tanker trucks per week enter the town of Paga, near the border, 80 percent of their fuel ends up in Burkina Faso. 179 While most fuel smuggling operations in Ghana take the fuel out of the country into neighboring states, there have been some known smuggling operations into Ghana. Inexpensive or even stolen refined Nigerian fuel, for a while, was being transported in either jerry cans or blue barrels in smuggling flotillas along the West African coast. 180 While most of it went to Benin and Togo, some did make its way into the Ghanaian market. The April 2016 ban on jerry cans in Nigeria, combined with other mitigation efforts such as fuel marking described below, seems to have largely thwarted this operation. 181 177 Ibid. 178 “Ghana’s NPA Aids Smuggling of Petrol—Official,” Energy Mix Report, August 22, 2013, http://energymixreport.com/ghanasnpa-aids-smuggling-of-petrol-official/. 179 “Fuel Smuggling Syndicate Exposed,” Ghana Web, May 6, 2016, http://www.ghanaweb.com/GhanaHomePage/NewsArchive/ Fuel-smuggling-syndicate-exposed-436499. 180 Charlotte Bozonnet, “Trade in Smuggled Fuel from Nigeria Oils Economies of West Africa,” The Guardian, October 12, 2012, https://www.theguardian.com/world/2012/oct/02/smugglefuel-west-africa. 181 Yomi Kazeem, “Nigeria’s Ban on Jerry Cans for Fuel Will Leave Millions in the Dark,” Quartz Africa, April 27, 2016, http:// 30 ATLANTIC COUNCIL
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PART III Stakeholders and Recommend
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Atlantic Council Board of Directors
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DOWNSTREAM OIL THEFT

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